Solving the Sprint Problem
May 24, 2012 5:00 AM PT
A quick look at the wireless industry over the last several years shows wave after wave of innovation and success. In fact, success has been bigger than anyone's wildest dreams.
However, success does not come to all. Why do some companies, like AT&T and Verizon, seem to hit the ball out of the park, while Sprint Nextel and T-Mobile keep striking out? And what can they do about it?
My Pick of the Week is an interesting trend exemplified by two companies, 8 X 8 and RingCentral.
What's the Problem?
Sprint Nextel has fewer customers and more spectrum per customer than both Verizon and AT&T, so it should also be growing rapidly right?
On the other hand, Sprint is on its third CEO over the last several years. Dan Hesse, who is Sprint's current CEO, has made several important improvements with the service, but it is still struggling compared to the major competitors.
When Hesse joined Sprint several years ago, I expected a rapid recovery. That didn't happen. So what's the problem?
For one thing, the economy tanked. Did this cause Sprint to continue struggling? The economy crashing didn't seem to hurt other companies like AT&T, Verizon, Apple and Google, as they rapidly grew in the wireless space. So I would say no. That was not the problem.
I have to give Hesse credit for repairing a broken Sprint. The company's service has improved since he joined. In fact, the latest American Customer Satisfaction Index has Sprint in first place, ahead of AT&T, T-Mobile and Verizon Wireless.
Five years ago, Sprint's service ranked last. Today, it is right up there with all the majors. That number surely means that all carriers are equal in the marketplace right? They aren't.
So what is wrong with Sprint and T-Mobile? Why do they keep swinging and striking out?
Doesn't Boldly Go
T-Mobile is still trying to recover from a self-inflicted late start joining the smartphone revolution. It missed the switch to 3G for several years. I waved the flag, but no one over there paid attention.
T-Mobile is on board now, but it is struggling to catch up to competitors, and it has not changed or updated its tired brand image in the marketplace either. Those are its obvious next steps.
So what's Sprint's excuse?
It has plenty of spectrum. Several years ago, it was one of the most advanced smartphone carriers in the industry. It led with smartphones and features. It was the first network to offer phones with cameras -- and, in fact, the next generation of cameras as well. That was before other carriers finally jumped in.
So where did it fall off course?
I think Sprint's problem is two parts: One is it's a quiet and timid company without a bold strategy for growth. Two, customers have long memories, and Sprint is doing nothing to change that.
This is not new. These problems have nagged at Sprint for decades. Unfortunately, this seems to be the way Sprint is.
It has always been too quiet for its own good. I remember speaking at a Sprint retreat in Texas several years ago, and the executives all understood the problems, and they were ready to jump in and solve them.
It all sounded good at the roundtable, but by the time it came to pulling the trigger, all they shot were blanks. Being bold just isn't Sprint's style.
Over the last few years, I have noticed several occasions when CEO Hesse recommended acquisitions and deals, and the board simply said no.
Why was the board afraid to pull the trigger? Had it become too gun-shy from recent years of corporate failure, or has this just been a continual problem over decades?
Another problem is customers have long memories. Even after Sprint solves a problem, it takes a while for customers to catch on. So even though it solved the quality problem, customers will take several years to realize it.
This happened to Sprint in the 1990s as well, when it was a long-distance company. After a while, it solved its quality problems back then as well -- yet it still took years for customers to realize it and for the company to recover.
Sprint eventually had to introduce an ad campaign with the pin drop on television commercials. Remember that?
Today's problem comes in large part from the quality problems and customer care issues that are now solved, based on these recent surveys.
So if this problem is solved, Sprint should be performing like AT&T and Verizon. So what's the problem now?
Sprint can either wait years for customers to figure it out once again, or it can help customers get it today.
My suggestion is simple. Update the brand. Yup. Refresh the brand. The solution is that simple. Yet for Sprint, it may also be that complex, because to tell you the truth, I am not sure Sprint really understands the power of this whole brand thing.
Every company has to continually refresh and modernize and expand its brand. Otherwise, the brand gets old and tired. Especially after a significant bout with problems like Sprint has dealt with over recent years.
Customers have to understand that the problems are behind them now.
Even AT&T updated its brand a few years ago, after SBC acquired the company and took the name. At the time, AT&T was the best-known brand in the business, but the valuable brand was old and tired.
I remember getting calls from SBC execs asking whether they should keep the SBC name or use AT&T after the acquisition. AT&T, of course, I said. That is the best-known and most valuable brand in the industry -- but freshen it up.
So they youth-en-ized it. They turned AT&T into at&t and restructured the entire brand identity.
Today AT&T is once again one of the youngest and hippest brands in the business. Not as hip as, say, Cingular was, but that is another story.
Sprint needs to update its brand in a similar way in the mind of the customer. It needs a refreshed identity -- a youth-en-ized identity. Tell the customer the problems no longer exist.
Sprint did send out an email on Monday pointing to this study. That's good, but that's not enough.
If it can do this one simple thing, I think it could turn the ship around in months, rather than waiting years for the marketplace to figure it out on it's own.
So Sprint, what's your next step?
One year from now your name could be hot and competitive and youthful and with-it, and your performance could match that of AT&T and Verizon. Or things can simply stay on the same slow track. Yawn.
This could be your comeback moment. Don't waste it -- use it.
Let's see if Sprint realizes this is the core solution to the problem it has been wrestling with for years.
For better or worse, it is Sprint's choice, after all.
My Pick of the Week is something interesting two companies are doing in an interesting space. You may not have heard about 8X8 and RingCentral yet, but when RingCentral briefed me, I realized that may be about to change.
These companies are vendors in the small- and mid-sized business community, competing with cable television companies and others offering a VoIP phone service.
They offer phone lines. Yup. No big deal, right? But listen to the history and where they are today.
Through the 1990s, when a business wanted phone lines, it called the local phone company -- period. It also had to get a PBX to manage the lines coming into the business and make them available to all the phones inside. Ah, remember those good ol' days?
Then Centrex service started to grow in popularity. That delivered PBX-like phone lines to a business. These were real phone lines, from a real phone company, but the equipment was all at the telephone company's central office instead of at the customer location.
Fast forward to today. This is where smaller VoIP companies like RingCentral and 8X8 play.
RingCentral calls itself "a PBX in the cloud." Think about it -- these companies require no hardware. They simply supply phone lines using the Internet. Not regular phone lines from the phone company, but VoIP lines. In fact this saves customers money over regular phone lines.
Sound familiar? This is similar to the service you can buy from cable television companies like Comcast, Time Warner and Cox, and others like Vonage and Skype -- although quality, reliability and price differ from player to player.
I don't use them, so I cannot address quality, but these companies sound like a good choice to consider in the newer and growing space for the small- and mid-sized business market.
I'll be following this space and will keep you up-to-speed as it grows in importance.